Later this year, Zune plans to release free applications such as Twitter for Zune and Facebook for Zune, in addition to fun 3-D games such as "Project Gotham Racing: Ferrari Edition," "Vans Sk8: Pool Service," and "Audiosurf Tilt." Games can be added to Zune HD via Zune Marketplace over the Wi-Fi connection or when connected to the Zune PC software.

Project Gotham Racing: Ferrari Edition must be the racing title we saw in that promotional video on Monday. In any case, it looks like Microsoft plans to take the iPod touch head-on.

In related news, Microsoft says version 4.0 of the Zune software for Windows is now out. The folks at Neowin have posted a little walkthrough of the new features, which include Smart DJ (think Microsoft's version of the iTunes Genius functionality), a new always-on-top "Mini mode," and integration with Windows 7's Aero Peek and jump lists.

The new software is available from this page for Windows 7, Vista, or XP in 32-bit and 64-bit versions.